🚀 Pakistan’s Trade Potential: Why Now Is the Time to Get Competitive

Altamash Janjua
Apr 20
3 min read

If you’re wondering why Pakistan hasn’t made a bigger splash in the global trade arena, you're not alone—and you're also asking the right question. Despite its strategic location, huge workforce, and strong export sectors like textiles, Pakistan’s trade performance has remained, well… underwhelming. But there’s a silver lining: the potential is massive, and the path forward is crystal clear.

Let’s unpack the numbers—and the solutions.

🧮 By the Numbers: What’s Holding Pakistan Back?

Between 2008 and 2017, Pakistan’s GDP grew at an average of just 3.7%, while the rest of South Asia raced ahead at 6.6%. That’s nearly half the speed.

During the same time, total exports of goods and services in South Asia surged by 165%. Thailand's exports jumped by 136%, Vietnam’s exploded by a jaw-dropping 519%. Pakistan? Just 50%—from $19.1 billion in 2005 to $28.7 billion in 2017.

And here’s a reality check: Pakistan lost 1.45% of export market share annually over the past decade. That’s while competitors like Malaysia, Mexico, and Thailand doubled theirs.

🧵 Stuck in the Past?

More than 70% of Pakistan’s exports come from just three product groups: textiles (mostly cotton), leather, and rice—a mix that hasn’t changed much in a decade.

While the rest of the world races toward synthetic fibers and high-tech exports, Pakistan’s dominant textile exports are still 84% cotton-based, compared to the 46% global average. That’s a red flag for staying competitive in modern apparel markets.

💡 What's Going Wrong?

Here’s the diagnosis:

High tariffs on imports are choking competition and limiting access to high-quality inputs.
Synthetic fibers, crucial for modern apparel, are taxed at 10–25%, making them hard to access.
Exporters struggle to maintain long-term relationships—only 34.8% of new export relationships survive 5 years (compared to 45.7% in India and 50.3% in Vietnam).
FDI (foreign direct investment) is lagging. From a high of 3.7% of GDP in 2007, it plummeted to just 0.9% in 2017.
Pakistan ranks 147 out of 190 in the World Bank’s Doing Business index (2018) and 115th in the Global Competitiveness Index (2018). In short, not a great pitch for investors.

🛠️ So, What Can Be Done?

The good news? We know what to do. Here's the playbook:

1. Make Trade a Core Strategy

Embed trade and export competitiveness into the national development vision. Trade shouldn’t be an afterthought—it should be the growth engine.

2. Rationalize Tariffs

Move toward low, transparent, and predictable tariffs. Start by slashing duties on intermediate goods and machinery, especially in priority sectors.

3. Fix the Refund System

Pakistan’s import duty suspension and refund programs need a revamp. They should be fast, accessible, and reliable—especially for small and mid-sized exporters.

4. Support Services Exports

It’s not just about goods. Knowledge-intensive services (like IT, e-commerce, and digital finance) are the future. Build infrastructure like tech parks and SEZs, and design policies that help these sectors scale.

5. Build Confidence for Investors

Ease regulatory bottlenecks. Improve energy and transport infrastructure. Simplify tax codes. Investors love certainty and speed—give them both.

6. Boost Women’s Participation

Include women in the trade story. Pakistan’s Strategic Trade Policy Framework (STPF) should explicitly address and fund women’s entrepreneurship.

🌐 The China Factor

Pakistan hasn’t yet unlocked the full potential of its Free Trade Agreement with China. That needs to change. Better integration with China could be a game changer—if it’s backed by smart policy and infrastructure upgrades.

🔮 The Bottom Line: Pakistan’s Trade Future Starts Now

Pakistan doesn’t lack potential—it lacks reform. But the roadmap is clear. With the right mix of policy overhaul, infrastructure investment, and institutional coordination, Pakistan could boost its exports, attract higher-quality FDI, and finally step into its role as a regional trade powerhouse.

This is not a 10-year plan. It’s a now plan. Let’s get moving.